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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (4232)	10/22/2002 12:23:45 AM
From: David Lawrence	Read Replies (1) \| Respond to of 4710

>>VTSS, just another company that got caught up in the bandwidth demand lies put out by WCON/UUnet. Michael, that's a good observation that I've been thinking about since the WCOM accounting fiasco was brought to light. If I'm not mistaken, the inflated revenue numbers out out by WCOM, Q, and others were, for the most part, hidden as round-trip revenues, so no real demand for bandwidth actually occurred. So, revenues derived from sales of hard goods by the likes of VTSS, AMCC, and on up the food chain to CIEN, CSCO, et al were actually supporting a smaller bandwidth demand then previously thought. Therefore, it seems reasonable to conclude that either: 1) there is not as great a long haul bandwidth glut as thought, since much of the published demand never existed and no capacity was needed to carry it. So, any uptick in demand will immediately flow through to the infrastructure and component manufacturers since the phantom capacity is not there to support the phantom demand; or 2) there is a much greater than expected glut because the capacity was deployed but was never actually utilized as thought. Further, WorldCom reported $billions in capex that was actually expenses. That would tend to support scenario 1 above, since there is a disconnect between carrier capex and infrastructure equipment providers' revenues, to the tune of billions of dollars over the past 2-3 years. Once again, it would seem going forward that a lower-than-though level of carries capex is needed to equipment providers to see more true demand. That's probably clear as mud, but maybe you can see what I'm getting at. In your opinion, is it 1,2, or 3 (none of the above). David